Mishma Chakanyuka, Staff Writer 
MARCH is Women’s Month, a time to celebrate the achievements and resilience of women across the globe. In the challenging world of finance, women are rising to meet complex economic situations and create innovative solutions. In this interview, The Financial Gazette’s Mishma Chakanyuka (MC) caught up with one such woman, the director-general of the Zimbabwe Association of Pension Funds (ZAPF), Sandra Musevenzo (SM). Below are excerpts of the interview:
MC: What initially drew you to the field of pensions finance? Were there any key mentors or experiences along the way that shaped your path?
SM: My brother, Alfonce Maseko, may his soul rest in peace, is the one who encouraged me to pursue the pensions programme. At the Harare Polytechnic, I wanted to do marketing because I love talking, and I love people but unfortunately, the programme was filled up and the only available program was the pensions diploma.
I’ve been fortunate to have several mentors throughout my career who have provided guidance and support. They’ve challenged me to think critically, take calculated risks, and always prioritise the needs of my clients. A key mentor, Noel Zvareva shaped my career, he taught me the ropes. He didn’t give up on me, he would always say, I will throw you in the deep end and I believe you will swim. He believed in me.
Sandra Musevenzo
The world of finance is constantly evolving, with new challenges and opportunities emerging all the time. I was drawn to the intellectual challenge of understanding complex financial systems and using that knowledge to develop sound strategies for the future.
I was also drawn to making a difference, I have always wanted to work with people. Pensions are a crucial part of ensuring a comfortable retirement. I believe everyone deserves to age with dignity, and this field allows me to contribute to that goal by helping people plan and invest for their golden years.
MC: How would you describe your leadership style, and what do you believe are the essential qualities of a successful leader in your industry?
SM: I believe in a flexible leadership style. In some situations, a clear and decisive approach is necessary. But often, the best results come from collaboration and leveraging the strengths of my team. I strive to adapt my style to the situation and the people involved.
I see myself as a visionary who sets ambitious goals and inspires my team to achieve them. However, I also prioritise open communication and feedback. Fostering a supportive environment where everyone feels valued allows my team to excel.
In the ever-changing world of pensions, I believe adaptability is key. I prioritise clear communication and data-driven decision-making to navigate challenges and opportunities.
MC: Could you share a significant challenge you faced in your career and how you overcame it?
SM: I had a difficult boss and I didn’t last in that role. I know people shouldn’t quit but if it’s suffocating you better leave, this has however shaped my future in that leaders are not quitters you find solutions to the problems and above all communication is key.
MC: What would you count as a defining success?
SM: Perhaps the most defining aspect isn’t what I can do today, but the potential for future growth. Success is measured by continuous learning and improvement. The more I interact with the world, the more I can develop and become an even greater tool for humanity.
MC: And if we may turn to the pensions industry, how has Zimbabwe’s inflation and the rapidly weakening currency impacted the real value of pension funds? What measures are being taken to mitigate this erosion of value?
SM: Zimbabwe’s recent economic situation, particularly the weakening currency, has a significant impact on the value of pension funds. The asset base of the industry has shrunk from US$5 billion in 2018 to approximately US$1,8 billion as at 30 September 2023 using the exchange rate at reporting date. The industry is now investing more in property. Property investment constitutes about 50 percent of the industry’s assets to hedge against inflation. Pension funds are shifting from the capital markets.
Pension funds are typically invested in local instruments. When the local currency weakens, the value of those investments erodes, leading to smaller payouts for retirees who depend on these funds.
MC: Are pension funds considering alternative investment strategies, such as investing in foreign currencies or assets, to hedge against devaluation risk? Are there any regulatory challenges to this?
SM: There has been an increase in US$ denominated assets. Foreign currency-denominated assets increased by 42 percent from US$228 million.
We are actively exploring several avenues to address this. One approach is to diversify pension fund investments to include assets less susceptible to local currency fluctuations. This could involve investing in regional or international markets.
Another strategy is to lobby for policies that promote economic stability and currency strengthening. A stable economy creates a more predictable environment for pension fund investments.
We are also looking at ways to encourage employer contributions that are indexed to inflation. This would help maintain the real value of contributions and future payouts.
Transparency and communication are crucial. We are working on improving communication with pensioners, informing them of the challenges and the steps being taken to protect their interests.
The situation is challenging, but we are confident that by working together — the government, financial institutions, and employers — we can find solutions to mitigate the erosion of pension value and ensure a more secure future for Zimbabwe’s retirees.
Pension funds are increasingly looking at alternative investments like foreign assets to diversify their portfolios and potentially hedge against local currency risks. This can help ensure long-term stability for future retirees.
Traditional investments like bonds may not always keep pace with inflation, especially when the local currency is weakening. Exploring alternatives like infrastructure or private equity can offer potentially higher returns and a hedge against devaluation.”
There can be regulatory hurdles for pension funds to invest in some alternative assets. These regulations are often in place to protect beneficiaries, but they can also limit diversification opportunities.
We’re hopeful for a collaborative approach between regulators and pension funds. Streamlining regulations while maintaining strong oversight can provide more flexibility for secure, long-term investments. Responsible risk management is key when considering alternative investments. In the end there is need to strike a balance between security and diversification.
MC: What is the current state of pensioner payouts in Zimbabwe? Are pensioners able to maintain an adequate standard of living given the economic conditions?
SM: Unfortunately, it is not looking good for pensioners in Zimbabwe. The cost of living is going up each and every day and the pensions system is under strain to keep up with the changes in the macroeconomic environment. Most of the industry’s income is trapped in fair value gains of investments (83 percent) meaning the industry is not liquid enough to adequately fund its pensioners. The replacement ratio of income contributed to pension funds is very low. Members need to appreciate that three pillars contribute to retirement savings being occupational pension, social security and personal savings, there is therefore need to strike a balance of these three pillars.
There are ongoing efforts to address the situation. The industry and government are exploring ways to improve pension payouts, but economic instability makes it difficult. Pensioners are advocating for a larger US dollar portion or a more frequent cost-of-living adjustment.
Unfortunately, for many pensioners, maintaining an adequate standard of living is a struggle. Soaring prices and inflation erode the value of their pensions. Basic necessities like food and medicine become difficult to afford.
There are support systems in place, with some corporates, charities and NGOs providing assistance to vulnerable pensioners. However, these efforts can’t fully address the widespread hardship. Pensioner payouts in Zimbabwe are a critical but complex issue. The introduction of US dollars has helped somewhat, but inflation remains a major obstacle. Many pensioners struggle to afford basic necessities. There are efforts to improve the situation, but a long-term solution is needed to ensure our elderly can live with dignity.
MC: What is your impression of the compensation process so far? How are funds coping with the requirements?
SM: The compensation process is a very noble initiative by the government and the regulator but is putting the industry under strain. There are issues that were identified in the Commission of Inquiry that remain unresolved that are posing as a challenge as industry tries to comply to the regulations. The industry does not have enough liquidity to fund the process. Members are seized with the matter and they are working tirelessly to ensure compliance.
MC: Any parting shots?
SM: The pension industry has made efforts to improve financial education and literacy among pension fund members and the economy at large through; Certificate of Proficiency in Trusteeship (COP) for Trustees who sit on Pension Fund Boards; ZAPF Training and Workshops ( Conference and POs and Chairpersons Convention); University Exchange Programs – Global Money Week and Career Guidance.
This includes providing information about retirement planning, investment options, and financial management. By empowering individuals with financial knowledge, they can make informed decisions about their retirement savings and better understand the benefits and risks associated with pension schemes.
Medical outreach for pensioners, in 2023 Matabeleland South, Gwanda. 2024 partnering with IPEC to go to Manicaland and Mashonaland East Province. We continue to source for funding for the outreach.
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